Hiscox Ltd

Interim Statement
2019
Contents Corporate highlights Profit before tax
of $168.0 million.
1 Corporate highlights
2 Chairman’s statement
7 Additional performance
Group key performance indicators
measures
Gross premiums written $2,337.5 million (2018: $2,228.8 million)
Financial summary
8 Condensed consolidated Net premiums earned $1,313.8 million (2018: $1,277.9 million)
interim income statement Profit before tax $168.0 million (2018: $162.7 million)
9 Condensed consolidated
Earnings per share ($) 51.2¢ (2018: 52.2¢)
interim statement of
comprehensive income Earnings per share (£) 39.6p (2018: 38.0p)
10 Condensed consolidated
Interim dividend increased to 13.75¢ per share (2018: 13.25¢)
interim balance sheet
11 Condensed consolidated Net asset value per share ($) 817.0¢ (2018: 833.7¢)
interim statement of changes
Net asset value per share (£) 641.9p (2018: 633.6p)
in equity
13 Condensed consolidated Group combined ratio 98.8% (2018: 87.9%)
interim cash flow statement
Return on equity (annualised) 13.3% (2018: 13.3%)
14 Notes to the condensed
consolidated interim Investment return (annualised) 4.8% (2018: 0.7%)
financial statements Foreign exchange gains/(losses) $15.6 million (2018: $(8.5) million)
30 Directors’ responsibilities
statement Reserve releases $26 million (2018: $154 million)
31 Independent review report
to Hiscox Ltd Operational highlights

Gross premiums written up 7% in constant currency, with all business

segments growing.

Profit before tax up 3% to $168 million, driven by a good investment return

of 4.8% annualised.

Interim dividend up 4% to 13.75¢.

The Group experienced a higher volume of claims in the first half of 2019 than
the same period last year.

eserves have been strengthened for prior-year claims from Typhoon Jebi, Hurricane
R
Michael and the risk excess book, as industry loss estimates have increased.

Retail growth has moderated as planned, due to on-going discipline in US private

company directors and officers’ (D&O) business and as Hiscox UK adapts to new
Disclaimer in respect of
forward-looking statements IT systems.

This interim statement may contain Hiscox Re and Hiscox London Market are capitalising on opportunities as they
forward-looking statements based arise, as pricing momentum continues to build.
on current expectations of, and
assumptions made by, the Group’s Gross premiums written ($m) Profit before tax ($m)
management. The Group is
exposed to a multitude of risks and 3,778.3 162.7 168.0
uncertainties and therefore cannot 135.6
accept any obligation to publicly 2,228.8 2,337.5
revise or update forward-looking
statements as a result of future events
or the emergence of new information
regarding past events, except to the 30 Jun 2018 31 Dec 2018 30 Jun 2019 30 Jun 2018 31 Dec 2018 30 Jun 2019
extent legally required. Therefore
undue reliance should not be placed
on any forward-looking statements. Corporate highlights Hiscox Ltd Interim Statement 2019 1
Chairman’s
statement
I am pleased to report that the Group
has delivered a pre-tax profit of
$168.0 million (2018: $162.7 million)
and grown gross premiums written
by 4.9% to $2,337.5 million
(2018: $2,228.8 million) in the first
six months of 2019. Every business
segment grew and Hiscox Retail was
once again the main profit generator,
albeit in a more active period for claims.
In aggregate we have experienced
favourable reserve development,
however there have been some
adverse movements on industry
losses and reserve strengthening
in some exited lines. The effects of
these have been more than offset
by strong investment returns, as
we have benefited from financial
market movements in the first half.
In Retail, growth has moderated as
we exercise discipline in US private
company directors and officers’ (D&O),
and implement new systems and ways
of working in the UK. In our London
Market business, market losses and
renewed discipline in Lloyd’s are
putting upward pressure on rates,
and the picture looks more positive
than this time last year. In reinsurance,
where rate improvement had been
more sporadic in the first quarter, we
have seen good price increases on
loss-affected risks in the second
quarter and are finding opportunities
in the retrocession market, where
reduced capacity has significantly
improved rates.
As ever, the results of the half year are
no indication of the results of the full
year, so as we approach hurricane
season there is still potential for the
wind to blow us off course.
Results
The result to 30 June 2019 was
a pre-tax profit of $168.0 million
(2018: $162.7 million). Gross
premiums written increased
by 4.9% to $2,337.5 million
(2018: $2,228.8 million), or 6.8%
in constant currency. Net earned
2 Chairman’s statement Hiscox Ltd Interim Statement 2019
premiums were $1,313.8 million
(2018: $1,277.9 million). The
combined ratio was 98.8%
(2018: 87.9%). Earnings per share
were 51.2 cents (2018: 52.2 cents)
or 39.6 pence (2018: 38.0 pence)
and net assets per share reduced to
817.0 cents (2018: 833.7 cents) or
641.9 pence (2018: 633.7 pence).
The annualised return on equity was
13.3% (2018: 13.3%).
As mentioned in the recent trading
update, the Group has made an
additional tax provision for the half
year with an impact of $58 million.
This is presented as a prior-year
adjustment and does not affect the
current year results. This additional tax
provision includes a reappraisal of how
Hiscox has invested in and classified
marketing activity historically. The
Group does not expect any further
charges to arise and re-affirms its
current guidance of 10-12% on its
effective tax rate.
Dividend, balance sheet and
capital management
The Board is pleased to announce
an interim dividend per share of
13.75 cents, representing a 3.8%
increase on the 2018 interim dividend.
The record date for the dividend will
be 9 August 2019 and the payment
date will be 11 September 2019.
The Board proposes to offer a scrip
alternative subject to the terms and
conditions of Hiscox Ltd's 2019
Scrip Dividend Scheme. The last
date for receipt of scrip elections
will be 16 August 2019 and the
reference price will be announced
on 27 August 2019.
Further details on the dividend election
process and scrip alternative can
be found on the investor relations
section of our corporate website,
www.hiscoxgroup.com.
Rates
In Hiscox Retail, rates have been
broadly flat. In the UK, competition in
commercial lines is being balanced
out by improved household rates,
where a prevalence of escape of
water claims continue to place upward
pressure on prices in the market.
In Hiscox London Market, we have
seen good rate momentum, with rates
up approximately 5% across the
portfolio, helped by the Lloyd’s Decile
10 directive and the cumulative impact
of two consecutive years of large
market losses. We have seen most
pronounced increases in US public
company D&O, cargo, marine hull,
major property and household.
In Hiscox Re & ILS, rates are up
approximately 6% across the portfolio
with increases confined generally
to loss-affected accounts, as an
abundance of capital continues to
dampen a widespread market turn.
During the April renewals, when the
majority of Japanese business renews,
we achieved rate increases of 8%
overall, while in June, when a lot of
Florida-based wind-exposed business
renews, rates increased by 12%. We
continue to see opportunities in the
retrocession market, where reduced
capacity combined with several years
of losses is contributing to material
rate-hardening.
Claims
As mentioned in our recent trading
update, the insurance market has seen
continued deterioration from 2018
catastrophe events, including Typhoon
Jebi in Japan and Hurricane Michael in
Florida. The scale of deterioration has
been significant, with industry loss
estimates having increased materially
since these events. As a result, the
Group has strengthened reserves for
prior-year claims from Typhoon Jebi,
Hurricane Michael and for the risk
excess book. The combined impact
of reserve strengthening for these
events is approximately $40 million net.
Last year, the Group benefited from
prior-year releases from Hurricanes
Harvey, Irma and Maria, which totalled
$25 million, however we did not have
that same benefit this year.
The Group has also strengthened
reserves for some exited classes
including healthcare, by $10 million.
Reserving for other prior year
attritional and large losses amounts
to $53 million.
After a particularly benign start to 2018,
our retail businesses have encountered
a more normal loss experience so
far this year, and we expect this to
continue in the second half. This
includes a higher volume of claims in
US D&O for private companies, where
we have reduced our exposure and
continue to do so. We expect the full
year combined ratio for Hiscox Retail to
be at the top end of our 90-95% range.
Reserve releases for the first half
were $26 million (2018: $154 million),
and we expect second half reserve
releases to be below $100 million
(2018: $168 million). Our prudent
approach to reserving has not changed.
Hiscox Retail
Hiscox Retail comprises all our retail
businesses around the world; Hiscox
UK, Hiscox Europe, Hiscox USA,
Hiscox Special Risks and Hiscox Asia.
In this segment, our specialist
knowledge and retail products
differentiate us and our on-going
investment in the brand helps us build
a strong market position. Hiscox Retail
is the single biggest segment in the
Group and delivered most of the
profit for the Group in the first half.
Gross premiums $1,154.6 million
written (2018: $1,113.0 million)
Profit before tax $137.7 million
(2018: $100.0 million)
Combined ratio 95.0% (2018: 90.7%)
Hiscox UK
Hiscox UK provides commercial
insurance for small- and medium-sized
businesses, as well as personal lines
cover, including high-value household,
fine art and luxury motor.
While gross premiums written
reduced by 1.7% to $378.5 million
(2018: $385.2 million1), the business
grew by 4.3% in constant currency.
Our broker business had a challenging
2018 as it adapted to a new system
with new ways of working, which
impacted growth. In the first half of this
year we have made good progress, with
service levels improving and work on
track to be completed by the year-end.
However, as we have previously said,
growth will remain subdued until these
changes are fully embedded.
Chairman's statement Hiscox Ltd Interim Statement 2019 3
The direct-to-consumer market
remains competitive, particularly in
Hiscox Retail is
commercial lines. Despite this we are
operating in healthy niche markets
the single biggest
and have been able to grow premiums
by around 10%. Our investment in
segment in the
marketing continues to differentiate Group and
us, and we will look to build on the
success of our campaigns in the delivered most
second half.
of the profit for
Cyber is still a growth area for the
Group and in March we launched a the Group in the
new and enhanced product called
CyberClear at an event attended by
first half.
over 350 brokers and business
partners. The new product provides
market-leading protection to our UK
customers and we are proud that it has
been rated the most comprehensive
cyber insurance policy for SMEs as the
first and only policy to receive a 100%
score in the Insurance Times Cyber
Product Report.
Bob Thaker transferred from Hiscox
Asia to take up the role of Hiscox UK
CEO during the period. After over four
years leading our business in Asia,
the UK is already benefiting from his
experience of building a business
in a competitive market with high
customer expectations.
Hiscox Europe
Hiscox Europe provides personal lines
cover, including high-value household,
fine art and classic car; as well as
commercial insurance for small- and
medium-sized businesses.
Hiscox Europe is doing very well and
delivered a strong performance,
with gross premiums written
growing by 9.0% to $245.1 million
(2018: $224.8 million¹), or 17.0% in
constant currency. The business has
benefited from the transfer of Hiscox
Ireland and a number of European
underwriting partnerships from Hiscox
UK to Hiscox Europe as part of our
previously mentioned Brexit-related
structural changes.
Spain and Germany are again the main
drivers of growth, with professional 1
To allow a like-for-like comparison, the
indemnity and cyber – where we are 2018 figure has been amended to account
for Hiscox Ireland GWP of $26.1 million
maintaining our leadership position transferring into Hiscox Europe as part
– performing particularly well. of our Brexit preparations.
Chairman’s
statement
continued
Hiscox Spain is benefiting especially
from the ‘MyHiscox’ broker extranet
which we rolled out in 2018 across
Europe. The team is also looking at a
number of partnership opportunities in
the technology and insurtech space.
In Hiscox Germany, we launched our
new CyberClear product in the second
quarter, which has been well received
by the market. We are growing our
team in Munich and will expand our
footprint in Germany with new offices
in Berlin and Stuttgart later in the year.
Hiscox Benelux experienced good
growth in the first half, with art and
private client and commercial lines
performing well. In classic car, work is
under way to strengthen our presence
with new offerings for the classic car
segment, such as a new motor liability
solution. Our online broker business
also continues to perform well in The
Netherlands, and the roll-out of the
‘MyHiscox’ portal will continue in
Belgium later this year with cyber
and professional indemnity solutions.
In Hiscox France, partnerships with
well-known financial institutions continue
to be an important distribution channel,
and we are adding new products such
as cyber to existing relationships.
Following Hiscox Ireland’s transfer into
Hiscox Europe, we have increased
our local presence in Dublin, with new
office space and new hires, and the
team has settled in well to their new
home within the Group.
Hiscox USA
Hiscox USA underwrites small- to
mid-market commercial risks through
brokers and directly to businesses
online and over the telephone. We
also partner with other insurers who
sell Hiscox products.
Gross premiums written increased
by 3.1% to $437.1 million
(2018: $423.9 million), driven by
growth in our direct and partnerships
4 Chairman’s statement Hiscox Ltd Interim Statement 2019
division where we now have over
320,000 customers. Our marketing
and brand-building efforts are critical
to powering our growth, and we intend
to increase our marketing spend in
the second half.
In the broker channel, we remain
disciplined, focusing on profitable
sectors and not chasing premium at
the expense of quality. For example,
strong competition in the cyber market
means we are being selective and
growing cautiously. In D&O, we are
doing what we said we would and
remain on-track to shrink the book
by more than half in response to
increased claims volumes and rate
inadequacy in the market. This
action is necessary and will improve
profitability in the longer term. We
have taken similar corrective action
to improve profitability in media and
entertainment, as previously disclosed,
and this work is also progressing
as planned.
As we said previously, we expect
growth for Hiscox USA to trend
towards the mid-point of our 5-15%
target range for our retail businesses
the second half.
The long-term opportunity for our
US business is significant, and with
our share of less than 1% of a
highly-fragmented market, we
are still early in our journey.
Hiscox Special Risks
Hiscox Special Risks underwrites
kidnap and ransom, security risks,
personal accident, classic car, jewellery
and fine art. Hiscox Special Risks has
teams in London, Guernsey, Cologne,
Munich, Paris, New York, Los Angeles
and Miami.
Gross premiums written reduced by 4.0%
to $67.0 million (2018: $69.8 million)
during the first half of the year. Over
30% of Special Risks’ business comes
from multi-year policies, which is
reflected in these figures. On an
underlying basis, growth was stable.
In kidnap and ransom, market conditions
remain challenging, with increased
competition and pricing pressure.
Our expertise and relationships in
this area are helping us to maintain
our leadership position in the market.
Our Security Incident Response (SIR)
product continues to perform well
and during the period we launched
an enhanced version that provides
additional protection for business
integrity risks such as bribery and
corruption, embezzlement and financial
statement fraud. The product now
covers 19 additional insured events
and we will continue to evolve it in line
with the ever-changing risk and
security landscape.
Recent political tensions with Iran have
resulted in a heightened state of alert
for marine clients travelling in the Gulf.
In response to this, within a week,
the team developed and delivered to
market a new product that focuses
specifically on providing crisis
management support and loss of
hire indemnity if a vessel is detained
or seized. New insurance products
rightly come under a lot of scrutiny and
need to go through a robust product
governance process before launch,
so I am delighted that we have been
able to respond swiftly and provide
real value for our clients when they
need it most.
Hiscox Asia
Our brand in Asia, DirectAsia, is
a direct-to-consumer business in
Singapore and Thailand that sells
predominantly motor insurance,
acquired by Hiscox in April 2014.
The business achieved gross premiums
written of $26.9 million (2018: $9.3 million)
during the first half of the year. Excluding
an adjustment for premium written
via an agency into Hiscox Insurance
Company (Bermuda) Limited, gross
premiums written were $18.6 million
(2018: $13.4 million). Both Singapore
and Thailand have had consecutive
record-breaking months for car and
motorcycle insurance sales, driven by
the success of new partnerships, and
we continue to seek similar partnerships
with like-minded businesses.
With Bob Thaker’s return to the
UK, we have appointed a new
Managing Director, Sirinthip (Celine)
Chotithamaporn. Celine has been
instrumental in launching two
start-ups in Thailand and has
significant insurance experience,
including most recently as President
and CEO of Allianz Thailand. Her
expertise will be valuable as we
focus on reaching scale and we
are delighted to have her on board.
Hiscox London Market
This segment uses the global licences,
distribution network and credit rating
available through Lloyd’s to insure
clients throughout the world.
Gross premiums $484.6 million
written (2018: $458.7 million)
Profit before tax $34.4 million
(2018: $42.7 million)
Combined ratio 103.3% (2018: 88.6%)
Gross premiums written in Hiscox
London Market increased by 5.6% to
$484.6 million (2018: $458.7 million),
or 6.6% in constant currency.
Rate improvements driven by the
Lloyd’s Decile 10 directive, of which
we have been great supporters,
and recent market losses, has led
to good growth in many of our core
lines including D&O, cargo, marine
hull, major property and household.
We continue to lead consortia for
general liability, flood and product
recall which gives us additional
scale and prominence in the market.
Like others in the market, Hiscox
London Market has been impacted by
a deteriorating loss experience from
Hurricane Michael, where 'assignment
of benefits' – a practice where insureds
can pass on the claims recovery rights
to a more aggressive third party –
has challenged the market in Florida.
Legislation to reform the practice was
passed in April, and we hope will provide
more stability in the market and fairer
outcomes for customers.
In May, we launched a new CyberClear
product for the London Market with a
first-of-its-kind experiential event on
the underwriting floor at Lloyd’s. ‘The
Cube’ aimed to test the market’s cyber
knowledge, and attracted more than
150 brokers and underwriters.
In terrorism, our new malicious
attack product has been well received
by the market. It provides cover
for property damage, business
interruption, loss of attraction and
crisis management assistance in an
event involving a vehicle, explosive
device or hand-held weapon.
Our adoption of Placing Platform
Ltd (PPL), part of the Lloyd’s Target
Operating Model work to move to
digital trading, remains on track
and we are currently placing over
half of all syndicate risks in this way.
We continue to work closely with
our broker partners to meet the
ambitious targets for the remainder
of this year.
Hiscox Re & ILS
The Hiscox Re & ILS segment
comprises the Group’s reinsurance
businesses in London and Bermuda
and insurance-linked security (ILS)
activity written through Hiscox ILS.
Gross premiums $698.3 million
written (2018: $655.6 million)
Profit before tax $14.0 million
(2018: $57.8 million)
Combined ratio 111.3% (2018: 71.5%)
Gross premiums written grew by 6.5%
to $698.3 million (2018: $655.6 million),
or 7.6% in constant currency.
While we are seeing some positive
rate momentum, particularly in those
lines hardest hit by two consecutive
years of losses, this is dampened
by the continued abundance of
reinsurance capacity available from
traditional and alternative sources.
We have responded rationally, growing
in wildfire liability where we have seen
rate increases of up to 200%, and
managing wildfire-exposed property
business where rates in some cases
have not responded in line with our
view of the risk.
In the risk excess book, we are
reducing our exposure on the bottom
end of programmes and pushing for
more risk-reflective pricing, particularly
in risk aggregate where we have
seen heavy losses and some
underperformance in recent years.
Chairman’s statement Hiscox Ltd Interim Statement 2019 5
Like others in the market, we have seen
some deterioration in claims resulting
from Typhoon Jebi, the most powerful
typhoon to hit Japan, as severe winds
impacted an area of high-value
construction ahead of the upcoming
Olympic Games and Rugby World Cup.
This has caused an unusually large
number of claims and increased repair
costs due to demand surge.
In Hiscox ILS, our funds have performed
in line with expectations. In January,
we started writing business to our new
fund, the Kiskadee Latitude Fund, which
gives investors access to a more diverse
portfolio of insurance and reinsurance
risks with less focus on pure property
catastrophe risk. Assets under
management are currently at $1.6 billion.
Investments
The investment return for the first six
months of 2019 is $147.5 million
(2018: $19.8 million), 4.8%
(2018: 0.7%) on an annualised
basis before derivatives and fees.
Assets under management at
30 June 2019 were $6,367 million
(2018: $6,460 million).
After the sharp reversal in conditions
towards the end of 2018, markets
have been bullish so far in 2019.
Global equity markets are up around
16%, where developed markets
have outperformed their emerging
counterparts year-to-date. Short-dated
corporate bonds spreads have fallen
by around one-third from recent highs,
meaning returns from credit have also
been strong. Market behaviour seems
at odds with a background of slowing
growth and geopolitical tensions such
as the US-China trade stand-off, but
statements by policymakers seem to
explain the apparent dichotomy.
US government bond yields have fallen
year-to-date, adding to fixed income
returns. This has been driven by
a significant shift in policymaker
behaviour. Where 2018 was mainly a
story of central banks tightening and
removing stimulus, 2019 has been the
opposite. A year ago, the US Federal
Reserve was expected to raise interest
rates two or three times in 2019,
however they now appear unlikely
to raise rates for the remainder of
Chairman’s
statement
continued
2019 and the markets are pricing
in several cuts. Likewise, the European
Central Bank was preparing to unwind
its quantitative easing programme, but
has now stated its intention to restart
stimulus. The targeted long-term
refinancing operations, to provide
liquidity to banks and support the
European economy, are due to be
restarted, and further cuts to interest
rates and more quantitative easing
have not been ruled out.
The risk-on/risk-off environment,
where asset returns tend to move
together, appears to remain in place.
Such volatile environments can be
difficult to navigate as they have a
tendency to change rapidly and
diversifying assets are hard to
identify. We remain cautious on our
expectations for investment return,
keeping risk assets at modest levels
(7.5%) and a relatively high allocation
to cash at 17.4%, with scope to
re-invest as circumstances allow.
Marketing
We now have more than one million
retail customers, and our investment
in marketing has been a key driver
of this growth, by building brand
awareness and differentiating us
in our key markets. This year we
will invest up to $90 million in
marketing and brand-building
(2018: $69.7 million), mainly in the
UK and USA, where we still see
significant growth opportunities.
During the first half of the year, we
launched our biggest ever integrated
campaign in the USA, featuring our
first ever US TV advertisements. The
‘Barcode’ campaign is the latest in
our ‘Encourage Courage’ brand
series aimed at small businesses,
and is supported by a $12 million
brand-building investment. We are
using highly targeted TV, radio, digital
and press for the campaign, including
well-known media outlets such as
The Wall Street Journal, in addition to
sponsorship of Major League Baseball
6 Chairman’s statement Hiscox Ltd Interim Statement 2019
and tailored adverts to mark Small
Business Week and International
Women’s Day.
In the UK, we have focused our
activities on cyber to help drive brand
awareness and affinity. We partnered
with Brompton Bikes to produce ‘The
Hack’ video campaign, which brought
to life what a cyber attack could look
like in the real world, and has achieved
more than 25 million views to date.
In both Thailand and Singapore, new
marketing campaigns and partnerships
helped us to achieve several
record-breaking months for car and
motorbike policy sales in the first half.
Richard Watson
As previously announced, Richard
Watson, our Group Chief Underwriting
Officer and Hiscox Ltd Board member,
will retire at the end of the year after 33
years at Hiscox. He will be sorely
missed in these roles, but I am pleased
we will continue to benefit from his
expertise as a Non Executive Director
of Hiscox Syndicates Ltd and as
Chairman of Hiscox Re & ILS.
When Richard joined Hiscox in 1986,
we were fewer than 30 people
underwriting around £80 million of
business. He has been central to
many of Hiscox’s successes over the
years; first as named Underwriter of
Syndicate 33, then as CEO of Hiscox
Global Markets (as we called our entire
Lloyd’s-based business at the time),
CEO of Hiscox USA, and finally as
Group Chief Underwriting Officer and
a Director of Hiscox Ltd. He has had
a remarkable career in insurance,
starting off as a broker at Sedgwick’s,
before joining us as a political risks
underwriter. He mastered many lines
of business at Hiscox and has always
been a guardian of the Hiscox culture.
Most recently, he has championed our
diversity and inclusion efforts and seen
us make good progress in this area.
I have enjoyed working with Richard
immensely and profited from his sound
judgement and forthright opinions.
I would like to thank him for his
outstanding contribution to Hiscox
and look forward to working with
him in his new roles.
Leadership changes can be disruptive,
which is why we spend a great deal
of time planning for succession
throughout the business. A new Chief
Underwriting Officer for the Group will
be announced in due course.
Outlook
At the full year, I talked about the
volume of change impacting the
business and our expectation that
would continue in 2019.
In Retail, embedding our new IT
systems and ways of working has
taken more time than we had hoped
but the alternative would have been to
be strangled by legacy systems as so
many of the banks have been. As the
year progresses, the UK is resolving
its issues and the USA is benefiting
from the UK’s experience. Such
infrastructure is essential for an efficient
multi-channel approach, where our
products are available for customers
to purchase however they choose –
whether that is through a broker,
online, over the telephone or via an
intermediary. We will continue to
invest in marketing to build our
retail businesses.
In big-ticket lines, we are very
supportive of Lloyd’s and their drive
for positive change. The market must
become a more efficient and modern
place to operate or it will slowly wither
on the vine. Such choices are made
easier when there is no choice. I am
pleased that our senior leaders are
taking an active role in initiatives
such as PPL which will define the
market’s future. The positive
momentum for rates in big-ticket
lines is good news, and although
the benefits will be gradual we are
ready to make the most of the
opportunities as they arise.
I would like to take this opportunity to
thank our employees, shareholders
and business partners for their
support, and look forward to a
productive second half.
Robert Childs
Chairman
29 July 2019
Additional
performance
measures
The Group uses, throughout its
financial publications, alternative
performance measures (APMs) in
addition to the figures that are prepared
in accordance with International
Financial Reporting Standards (IFRS).
The Group believes that these
measures provide useful information
to enhance the understanding of its
financial performance. These APMs
are: profit excluding foreign exchange
gains/(losses), premium growth in
local currency, combined claims and
expense ratios, return on equity,
net asset value per share and reserve
releases. These are common measures
used across the industry, and allow
the reader of the half year report to
compare across peer companies.
The APMs should be viewed as
complementary to, rather than a
substitute for, the figures prepared
in accordance with IFRS.
Profit excluding foreign exchange
gains/(losses)
This represents the profit for the
period after deducting foreign
exchange gains or adding back
foreign exchange losses in the relevant
period. This enables the reader of
these financial statements, and the
Group, to measure the comparability
of underlying profitability without the
foreign exchange volatility. To obtain
the value, the reader of these financial
statements should remove the foreign
exchange gains/(losses), as identified
in the income statement, from the
profit for the period.
Premium growth in local currency
Gross premiums written, as reported
in the consolidated income statement,
is measured in the underlying currency
and compared to prior years on a
constant currency rate basis. This
eliminates the impact exchange
fluctuations have on the result and
therefore allows a direct comparison
between years. This is performed
on a business unit basis and gives
an accurate indication of premium
growth compared to prior years.
Combined claims and expense ratios
The combined claims and expense
note 7, along with an explanation
of the calculation.
ratios are common measures
enabling comparability across the Reserve releases
insurance industry, that measures
the relevant underwriting profitability
Reserve releases are a measure of
favourable development on claims
of the business by reference to its reserves that existed at the prior
costs as a proportion of its net earned balance sheet date. It enables the
premium. The Group calculates users of the financial statements
the combined ratio as if the Group to compare and contrast the
owned all of the business, including Group’s performance relative to peer
the 27.5% (30 June 2018: 27.4%; companies. The Group maintains
31 December 2018: 27.4%) of a prudent approach to reserving, to
Syndicate 33 that the Group does help mitigate the uncertainty within
not own (Group-controlled income). the reserve estimates. The release
The Group does this to enable is calculated as the movement in
comparability from period to period ultimate losses on prior accident years
as the business mix may change in a between the current and prior-year
segment between insurance carriers, balance sheet date, as shown in note
and this enables the Group to measure 13, as the result of better than
all of our underwriting businesses on expected outcomes of the estimates
an equal measure. The calculation is booked at the prior-period close.
discussed further in note 6, operating
segments. The combined ratio excluding
foreign exchange gains/(losses) is
calculated as the sum of the claims
ratio and the expense ratio.
Return on equity (ROE)
The ROE percentage is common within
the financial services industry and
the Group uses ROE as one of its
key performance metrics. While the
measure enables the company to
compare itself against other peer
companies in the immediate industry,
it is also a key measure internally where
it is used to compare the profitability
of business segments, and underpins
the performance-related pay and
share-based payment structures,
as discussed within the remuneration
policy report in the Annual Report
and Accounts. The ROE is shown in
note 8, along with an explanation of
the calculation.
Net asset value (NAV) per share
The Group uses NAV per share as
one of its key performance metrics,
including using the movement of NAV
per share in the calculation of the
options vesting of awards granted
under performance share plans (PSP)
from 2018 onwards. This is a widely
used key measure for management
and also for users of the financial
statements to provide comparability
across peers in the market. Net asset
value (NAV) per share is shown in
Additional performance measures Hiscox Ltd Interim Statement 2019 7
Condensed consolidated interim income statement Condensed consolidated interim statement
For the six-month period ended 30 June 2019 of comprehensive income
For the six-month period ended 30 June 2019
Reviewed Audited Reviewed Audited
Reviewed six months to year to Reviewed six months to year to
six months to 30 June 2018 31 Dec 2018 six months to 30 June 2018 31 Dec 2018
30 June 2019 (restated)* (restated)* 30 June 2019 (restated)* (restated)*
Note $m $m $m $m $m $m

Income Profit for the period 145.1 148.0 117.9

Gross premiums written 6 2,337.5 2,228.8 3,778.3 Other comprehensive income
Outward reinsurance premiums (870.1) (829.5) (1,196.8) Items that will not be reclassified to the income statement:
Remeasurements of the net defined benefit obligation – – 20.2
Net premiums written 1,467.4 1,399.3 2,581.5 Income tax effect – – (4.1)

Gross premiums earned 1,891.9 1,804.3 3,699.8 – – 16.1
Premiums ceded to reinsurers (578.1) (526.4) (1,126.2)
Items that may be reclassified subsequently to the income statement:
Net premiums earned
1,313.8 1,277.9 2,573.6 Exchange losses on translating foreign operations (13.3) (1.8) (14.7)
Income tax effect – – –
Investment result 9 147.5 19.8 38.1
Other income 10 25.8 24.0 46.8 (13.3) (1.8) (14.7)

Total income
1,487.1 1,321.7 2,658.5 Other comprehensive income net of tax (13.3) (1.8) (14.7)

Expenses Total comprehensive income for the year (all attributable to owners of Company) 131.8 146.2 119.3
Claims and claim adjustment expenses (1,194.1) (786.0) (2,326.6)
*See note 2.2 for further details.
Reinsurance recoveries 510.3 270.4 1,100.8

Claims and claim adjustment expenses, net of reinsurance (683.8) (515.6) (1,225.8) The notes to the condensed consolidated interim financial statements are an integral part of this document.
Expenses for the acquisition of insurance contracts (468.3) (425.8) (882.0)
Reinsurance commission income 130.6 116.6 240.3
Operational expenses 10 (295.0) (310.1) (607.5)
Net foreign exchange gains/(losses) 15.6 (8.5) (13.7)

Total expenses
(1,300.9) (1,143.4) (2,488.7)

Results of operating activities 186.2 178.3 169.8
Finance costs 11 (18.2) (15.4) (34.6)
Share of (loss)/profit of associates after tax – (0.2) 0.4

Profit before tax 168.0 162.7 135.6

Tax expense 12 (22.9) (14.7) (17.7)

Profit for the period (all attributable to owners of the Company) 145.1 148.0 117.9

Earnings per share on profit attributable to owners of the Company

Basic 14 51.2¢ 52.2¢ 41.6¢
Diluted 14 50.2¢ 50.8¢ 40.8¢

*See note 2.2 for further details.

The notes to the condensed consolidated interim financial statements are an integral part of this document.

8 Condensed consolidated interim income statement Hiscox Ltd Interim Statement 2019 Condensed consolidated interim statement of comprehensive income Hiscox Ltd Interim Statement 2019 9
Condensed consolidated interim balance sheet Condensed consolidated interim statement
As at 30 June 2019 of changes in equity
For the six-month period ended 30 June 2019
Reviewed Audited Reviewed
Reviewed 30 June 31 Dec
30 June 2018 2018 Equity
2019 (restated)* (restated)* Currency attributable Non-
Note $m $m $m Share Share Contributed translation Retained to owners of controlling
capital premium surplus reserve earnings the Company interest Total
Assets For the six-month period ended 30 June 2019 $m $m $m $m $m $m $m $m

Goodwill and intangible assets 231.3 190.8 204.6

Balance at 1 January 2019 34.0 57.6 184.0 (325.3) 2,307.6 2,257.9 1.1 2,259.0
Property, plant and equipment
130.7 62.8 61.4
Profit for the period (all attributable
Investments in associates 8.6 10.2 9.9
to owners of the Company) – – – – 145.1 145.1 – 145.1
Deferred tax 56.2 59.2 60.7
Other comprehensive income net of tax
Deferred acquisition costs 486.4 520.4 455.9
(all attributable to owners of the Company) – – – (13.3) – (13.3) – (13.3)
Financial assets carried at fair value 16 5,316.6 4,927.5 5,029.7
Employee share options:
Reinsurance assets 13 2,845.5 2,148.9 2,456.6
Equity settled share-based payments – – – – 7.2 7.2 – 7.2
Loans and receivables including insurance receivables 1,775.4 1,527.8 1,265.1
Proceeds from shares issued – 2.1 – – – 2.1 – 2.1
Current tax asset – 1.1 3.6
Deferred and current tax on
Cash and cash equivalents 1,110.5 1,594.5 1,288.8
employee share options – – – – 1.9 1.9 – 1.9
Total assets 11,961.2 11,043.2 10,836.3 Net movements of treasury shares held by Trust – – – – – – – –
Shares issued in relation to Scrip Dividend – 6.2 – – – 6.2 – 6.2
Dividends paid to owners of the Company – – – – (86.4) (86.4) – (86.4)
Equity and liabilities
Shareholders’ equity Balance at 30 June 2019 34.0 65.9 184.0 (338.6) 2,375.4 2,320.7 1.1 2,321.8
Share capital 34.0 33.9 34.0
Share premium 65.9 53.9 57.6 Reviewed
Contributed surplus 184.0 184.0 184.0 (restated)*
Currency translation reserve (338.6) (312.4) (325.3)
Equity
Retained earnings 2,375.4 2,404.3 2,307.6 Currency attributable Non-
Share Share Contributed translation Retained to owners of controlling
Equity attributable to owners of the Company
2,320.7 2,363.7 2,257.9 capital premium surplus reserve earnings the Company interest Total
For the six-month period ended 30 June 2018 $m $m $m $m $m $m $m $m
Non-controlling interest 1.1 1.1 1.1
Balance at 1 January 2018 (as reported) 33.9 45.8 184.0 (310.6) 2,414.2 2,367.3 1.1 2,368.4
Total equity 2,364.8 2,259.0
2,321.8 Cumulative impact of prior-period adjustments – – – – (51.2) (51.2) – (51.2)

Employee retirement benefit obligation 32.2 62.5 35.8
Deferred tax 9.2 9.4 9.1
Insurance liabilities 13 7,366.8 6,474.1 6,701.5
Financial liabilities 16 713.8 735.4 700.5
Current tax 46.5 52.3 43.9
Trade and other payables 1,470.9 1,344.7 1,086.5
Total liabilities
9,639.4 8,678.4 8,577.3
Total equity and liabilities
11,961.2 11,043.2 10,836.3
*See note 2.2 for further details.
The notes to the condensed consolidated interim financial statements are an integral part of this document.
Balance at 1 January 2018 (restated) 33.9 45.8 184.0 (310.6) 2,363.0 2,316.1 1.1 2,317.2
Profit for the period (all attributable
to owners of the Company) – – – – 148.0 148.0 – 148.0
Other comprehensive income net of tax
(all attributable to owners of the Company) – – – (1.8) – (1.8) – (1.8)
Employee share options:
Equity settled share-based payments – – – – 13.8 13.8 – 13.8
Proceeds from shares issued – 4.2 – – – 4.2 – 4.2
Deferred and current tax on
employee share options – – – – 2.5 2.5 – 2.5
Net movements of treasury shares held by Trust – – – – (47.0) (47.0) – (47.0)
Shares issued in relation to Scrip Dividend – 3.9 – – – 3.9 – 3.9
Dividends paid to owners of the Company – – – – (76.0) (76.0) – (76.0)

Balance at 30 June 2018 33.9 53.9 184.0 (312.4) 2,404.3 2,363.7 1.1 2,364.8

*See note 2.2 for further details.

10 Condensed consolidated interim balance sheet Hiscox Ltd Interim Statement 2019 Condensed consolidated interim statement of changes in equity Hiscox Ltd Interim Statement 2019 11
Condensed consolidated interim statement
of changes in equity continued
For the six-month period ended 30 June 2019
Audited
(restated)*
Equity
Currency attributable Non-
Share Share Contributed translation Retained to owners of controlling
capital premium surplus reserve earnings the Company interest Total Profit before tax 168.0 162.7 135.6
For the year ended 31 December 2018 $m $m $m $m $m $m $m $m
Balance at 1 January 2018 33.9 45.8 184.0 (310.6) 2,414.2 2,367.3 1.1 2,368.4
Cumulative impact of prior-period adjustments – – – – (51.2) (51.2) – (51.2)
Balance at 1 January 2018 (restated) 33.9 45.8 184.0 (310.6) 2,363.0 2,316.1 1.1 2,317.2
Profit for the year (all attributable
to owners of the Company) – – – – 117.9 117.9 – 117.9
Other comprehensive income
net of tax (all attributable to
owners of the Company) – – – (14.7) 16.1 1.4 – 1.4
Employee share options: Financial assets carried at fair value (207.5) 72.9 3.0
Equity settled share-based payments – – – – (3.6) (3.6) – (3.6)
Proceeds from shares issued 0.1 4.0 – – – 4.1 – 4.1
Deferred and current tax on
employee share options – – – – 4.2 4.2 – 4.2
Net movements of treasury shares held by Trust – – – – (76.5) (76.5) – (76.5)
Shares issued in relation to Scrip Dividend – 7.8 – – – 7.8 – 7.8
Dividends paid to owners of the Company – – – – (113.5) (113.5) – (113.5)
Balance at 31 December 2018 34.0 57.6 184.0 (325.3) 2,307.6 2,257.9 1.1 2,259.0
*See note 2.2 for further details.
The notes to the condensed consolidated interim financial statements are an integral part of this document.
12 Condensed consolidated interim statement of changes in equity Hiscox Ltd Interim Statement 2019
Condensed consolidated interim cash flow statement
For the six-month period ended 30 June 2019
Reviewed Audited
six months to
Reviewed year to
six months to 30 June 2018 31 Dec 2018
30 June 2019 (restated)* (restated)*
Note $m $m $m
Adjustments for:
Net foreign exchange (gains)/losses (15.6) 8.5 13.7
Interest and equity dividend income 9 (60.4) (49.5) (103.0)
Interest expense 11 18.2 15.4 34.6
Net fair value (gains)/losses on financial assets (73.4) 13.3 33.8
Depreciation, amortisation and impairment 10 22.7 16.9 33.2
Charges in respect of share-based payments 10 7.2 13.9 (3.6)
Changes in operational assets and liabilities:
Insurance and reinsurance contracts 28.3 189.4 136.3
Financial liabilities carried at fair value (0.8) (18.5) (18.3)
Financial liabilities carried at amortised cost – (17.5) (53.2)
Other assets and liabilities 18.8 66.2 58.5
Cash paid to the pension fund (3.6) – (3.7)
Interest received 56.6 44.6 90.8
Equity dividends received 3.4 0.6 0.8
Interest paid (3.9) (2.3) (33.9)
Current tax paid (10.3) (7.0) (24.2)
Net cash flows from operating activities (52.3) 509.6 300.4
Purchase of property, plant and equipment – (3.7) (7.8)
Purchase of intangible assets (42.4) (22.6) (51.8)
Net cash flows from investing activities (42.4) (26.3) (59.6)
Proceeds from the issue of ordinary shares** 2.1 2.6 4.1
Shares repurchased – (47.0) (76.5)
Distributions made to owners of the Company** 15 (80.2) (70.5) (105.7)
Proceeds from long-term debt issue, net of fees – 380.3 380.3
Principal elements of lease payments (6.8) – –
Net cash flows from financing activities (84.9) 265.4 202.2
Net (decrease)/increase in cash and cash equivalents (179.6) 748.7 443.0
Cash and cash equivalents at 1 January 1,288.8 867.8 867.8
Net (decrease)/increase in cash and cash equivalents (179.6) 748.7 443.0
Effect of exchange rate fluctuations on cash and cash equivalents 1.3 (22.0) (22.0)
Cash and cash equivalents at end of period 18 1,110.5 1,594.5 1,288.8
*See note 2.2 for further details.
**Following a review, prior year comparatives have been re-presented. Scrip dividend amounts at 30 June 2018 of $5.5 million have been removed
from these line items. This does not result in any change to net cash flows from financing activities.
The notes to the condensed consolidated interim financial statements are an integral part of this document.
Condensed consolidated interim cash flow statement Hiscox Ltd Interim Statement 2019 13
Notes to the condensed consolidated interim
financial statements
1 General information
Hiscox Ltd (the ‘Company’) is a
public limited company registered
and domiciled in Bermuda. The
condensed consolidated interim
financial statements for the Company
as at, and for the six months ended,
30 June 2019 comprise the Company
and its subsidiaries (together referred
to as the ‘Group’) and the Group’s
interest in associates. The Chairman’s
statement accompanying these
condensed consolidated interim
financial statements forms the
Interim Management Report for
the half year ended 30 June 2019.
The Directors of Hiscox Ltd are listed
in the Group’s 2018 Report and
Accounts. A list of current Directors
is maintained and available for
inspection at the registered office
of the Company located at 4th Floor,
Wessex House, 45 Reid Street,
Hamilton HM 12, Bermuda.
2 Basis of preparation
These condensed consolidated
interim financial statements for the
six months to 30 June 2019 have
been prepared in accordance with
IAS 34 Interim Financial Reporting,
as endorsed by the European Union,
and the Disclosure Rules and
Transparency Rules issued by the
Financial Conduct Authority.
The accounting policies applied
in the condensed consolidated
interim financial statements are the
same as those applied in Hiscox
Ltd’s 2018 consolidated financial
statements except for the changes
described below.
These condensed consolidated
interim financial statements are
unaudited but have been reviewed by
the auditor, PricewaterhouseCoopers
Ltd. They should be read in
conjunction with the audited
consolidated financial statements
of the Group as at, and for the year
ended, 31 December 2018.
14 Notes to the condensed consolidated interim financial statements Hiscox Ltd Interim Statement 2019
In preparing these condensed
consolidated interim financial
statements, management make
judgements, estimates and assumptions
that affect the application of accounting
policies and the reported amounts of
assets and liabilities, income and
expense. Actual results may differ
from these estimates. The significant
judgements made by management
in applying the Group’s accounting
policies and the key sources of
estimation uncertainty were the same
as those that applied to the consolidated
financial statements as at and for the
year ended 31 December 2018.
After making enquiries, the
Directors have an expectation that
the Company and the Group have
adequate resources to continue in
operational existence over a period
of at least 12 months from the date
of approval of the condensed
consolidated interim financial
statements. For this reason, they
continue to adopt the going
concern basis in preparing the
condensed consolidated interim
financial statements.
Items included in the financial
statements of each of the Group’s
entities are measured in the currency
of the primary economic environment
in which that entity operates (‘the
functional currency’). The condensed
consolidated interim financial
statements are stated in US Dollars
which is the Group’s presentation
currency. Except where otherwise
indicated, all amounts presented in the
financial statements are in US Dollars
millions ($m) rounded to the nearest
hundred thousand Dollars.
These condensed consolidated
interim financial statements were
approved on behalf of the Board
of Directors by the Chief Executive,
Bronek Masojada and the Chairman,
Robert Childs. Accordingly, the Interim
Statement 2019 was approved for
issue on Monday, 29 July 2019.
2.1. New and amended accounting
standards adopted by the Group
The following accounting standard is
effective for annual periods beginning on or
after 1 January 2019 and has been applied
in preparing these interim condensed
consolidated financial statements:
IFRS 16 Leases
IFRS 16 Leases supersedes IAS 17
Leases and sets out the principles
for the recognition, measurement,
presentation and disclosure of leases.
IFRS 16 requires lessees to account for
leases under a single on-balance sheet
model. Lessor accounting under IFRS 16
is substantially unchanged from IAS 17.
Lessors will continue to classify leases as
either operating or finance leases using
similar principles as in IAS 17. Therefore,
IFRS 16 did not have an impact for
leases where the Group is the lessor.
The Group has adopted IFRS 16
retrospectively from 1 January 2019,
but has not restated comparatives
for the 2018 reporting period, as
permitted under the specific transitional
provisions in the standard. The
reclassifications and the adjustments
arising from the new leasing rules are
therefore recognised in the opening
balance sheet on 1 January 2019.
On adoption of IFRS 16, the Group
recognised lease liabilities in relation
to leases which had previously been
classified as ‘operating leases’ under
the principles of IAS 17 Leases. These
liabilities were measured at the present
value of the remaining lease payments,
discounted using applicable incremental
borrowing rates as of 1 January 2019.
The associated right-of-use assets were
measured at the amount equal to the
lease liability, adjusted by the amount of
any prepaid or accrued lease payments
relating to that lease recognised in the
balance sheet as at 31 December
2018. There were no onerous lease
contracts that would have required an
adjustment to the right-of-use assets at
the date of initial application.
The Group has elected not to reassess The undiscounted future minimum 30 June 2019 amounting to
whether a contract is, or contains a payments disclosed under the prior $6.8 million, which under IAS 17
lease at the date of initial application. standard at 31 December 2018 would be classified as operating leases,
Instead, for contracts entered into were $87.0 million. The impact of are presented under cash flows from
before the transition date, the Group discounting was $6.3 million, the financing activities. Additionally, the
relied on its assessment made applying short-term leases, for which an interest expense on the lease liabilities
the previous accounting guidance. exemption was applied, amounted calculated under IFRS 16 amounting to
to $1.9 million. The resulting total lease $0.9 million is presented under cash
In addition, the Group has opted liability recognised as at 1 January flows from operating activities.
to use the recognition exemptions 2019 under IFRS 16 is $78.8 million.
for lease contracts that, at the 2.2. Prior-period adjustments
commencement date: Impact on the condensed consolidated In 2019, the Group has made an
ehave a lease term of 12 months income statement for the six months additional tax provision relating to
or less and do not contain a ended 30 June 2019: reappraisal of uncertain tax positions,
purchase option (short-term the most significant one relates to a
leases); and The depreciation expenses from classification of marketing activity
elease contracts for which the right-of-use assets (operating affecting a historical tax position.
underlying asset is of low value expenses) and interest expense on
(low-value assets). the lease liabilities (finance costs) This has been presented as a
under IFRS 16 in the first six months prior-period adjustment and has led
Payments associated with short-term of 2019 were $1.1 million higher to a decrease in profit after tax of
leases and leases of low-value assets than the amount of operating lease $10.1 million in 2018 (30 June 2018:
are recognised on a straight-line basis expenses under IAS 17. $5.1 million) and a decrease in opening
as an expense in profit or loss. retained earnings for 2018 of
Impact on the condensed consolidated $51.2 million with a decrease in
The impact on the consolidated cash flow statement for the six months closing equity at 31 December 2018
balance sheet as at 1 January 2019 ended 30 June 2019: of $58.1 million. The impact on the
is shown below: condensed consolidated income
$m Compared with the previous accounting statement, balance sheet, equity
for operating leases under IAS 17, and cash flow statements are shown
Assets
the application of the new standard in the tables below and overleaf.
Increase in property, plant
and equipment 78.8 affects the classification of cash flows.
Analysed as right-of-use In prior years, operating lease payments
assets related to: were presented as operating cash
eproperties 77.9 flows. Lease payments are now split
evehicles 0.9 into payments of principal that are
Liabilities presented as financing cash flows, and
Increase in trade and
payments of interest that are presented
other payables 78.8
as operating cash flows. Payments
Analysed as lease liabilities 78.8
related to leases for the period ending
Year to 31 December 2018 Six months to 30 June 2018
Effect of Effect of
prior-period prior-period
As reported adjustments Restated As reported adjustments Restated
Income statement and other comprehensive income (OCI) $m $m $m $m $m $m
Total expenses 2,486.9 1.8 2,488.7 1,142.5 0.9 1,143.4
Effect analysed as:
Operational expenses 605.7 1.8 607.5 309.2 0.9 310.1
Profit before tax 137.4 (1.8) 135.6 163.6 (0.9) 162.7
Tax expense (9.4) (8.3) (17.7) (10.5) (4.2) (14.7)
Profit after tax 128.0 (10.1) 117.9 153.1 (5.1) 148.0
OCI: exchange losses on translating foreign operations (17.9) 3.2 (14.7) (3.2) 1.4 (1.8)
Total comprehensive income 126.2 (6.9) 119.3 149.9 (3.7) 146.2
Notes to the condensed consolidated interim financial statements Hiscox Ltd Interim Statement 2019 15
Notes to the condensed consolidated interim Title
financial statements continued
Year to 31 December 2018 processes required for establishing majority of gross premium income There is no impact on the consolidated
Effect of the reliability of fair values obtained written in these lines of business investment result and following this
prior-period for some classes of financial assets occurs during the first half of the change, the comparative figures in
adjustments
– opening affected by ongoing periods of calendar year. The Group actively the segmental reporting have been
As reported balance Restated
diminished liquidity. In order to assist participates in many regions and if re-presented.
Opening equity $m $m $m
users, the Group has disclosed any catastrophic events do occur,
Total equity the measurement attributes of its it is likely that the Group will share The Group’s four primary business
Balance at 1 January
2,368.4 (51.2)
2,317.2 investment portfolio in a fair value some of the market’s losses. segments are identified as follows:

hierarchy in note 17 in accordance Consequently, the potential for Hiscox Retail brings together the
with IFRS 13 Fair Value Measurement. significantly greater volatility in results of the UK and Europe, and
Year to 31 December 2018 Six months to 30 June 2018
expected returns remains during the Hiscox International being the
Effect of Effect of Effect of
The Group remains susceptible second half of the year. Details of the USA, Special Risks and Asia retail
prior-period prior-period prior-period Effect of
adjustments adjustments at adjustments prior-period to fluctuations in rates of foreign Group’s recent exposures to these business divisions.
– opening 31 December – opening adjustments at
exchange, in particular between classes of business are disclosed in
As reported balance 2018 Restated As reported balance 30 June 2018 Restated
Balance sheet $m $m $m $m $m $m $m $m US Dollars and Sterling. The estimated the Group’s 2018 Report and Accounts. Hiscox UK and Europe underwrite
impact of a 10% strengthening or personal and commercial lines of
Total assets 10,846.3 – (10.0) 10,836.3 11,042.1 – 1.1 11,043.2 5 Related-party transactions business through Hiscox Insurance
Effect analysed as adjustments to weakening of Sterling against the
US Dollar on profit before tax: Transactions with related parties during Company Limited and Hiscox Société
Current tax asset 13.6 – (10.0) 3.6 – – 1.1 1.1
the period are consistent in nature and Anonyme, together with the fine art
Total liabilities 8,529.2 51.2 (3.1) 8,577.3 8,622.4 51.2 4.8 8,678.4
Effect analysed as adjustments to: Effect on profit before tax $m
scope with those disclosed in note 33 of and non-US household insurance
Deferred tax – 9.6 (0.5) 9.1 – 9.6 (0.2) 9.4 the Group’s 2018 Report and Accounts. business written through Syndicate 33.
Current tax 10.3 37.8 (4.2) 43.9 10.3 37.8 4.2 52.3 As at 30 June 2019 In addition, Hiscox UK includes
Trade and other payables 1,081.1 3.8 1.6 1,086.5 1,340.1 3.8 0.8 1,344.7 10% strengthening of GBP 14 6 Operating segments elements of specialty and international
Total equity 2,317.1 (51.2) (6.9) 2,259.0 2,419.7 (51.2) (3.7) 2,364.8 10% weakening of GBP (11)
The Group’s operating segment reporting employees and officers’ insurance
Effect analysed as adjustments to: follows the organisational structure written by Syndicate 3624. Hiscox
As at 30 June 2018
Retained earnings 2,368.9 (51.2) (10.1) 2,307.6 2,460.6 (51.2) (5.1) 2,404.3
10% strengthening of GBP 16 and management’s internal reporting Europe excludes the kidnap and
Currency translation reserve (328.5) – 3.2 (325.3) (313.8) – 1.4 (312.4)
10% weakening of GBP (20) systems, which form the basis for ransom business written by Hiscox
assessing the financial reporting Société Anonyme.
Year to 31 December 2018 Six months to 30 June 2018
This analysis assumes that all other performance of, and allocation of
Effect of Effect of variables, in particular interest rates, resource to each business segment. Hiscox International comprises the
prior-period prior-period
Other As reported adjustments Restated As reported adjustments Restated remain constant and that the underlying specialty and fine art lines written through
valuation of assets and liabilities in In the first half of 2019, the Group has Hiscox Insurance Company (Guernsey)
Earnings per share (¢) 45.1 (3.5) 41.6 54.0 (1.8) 52.2 their base currency is unchanged. reviewed the segmental presentation Limited, and the motor business written
Diluted earnings per share (¢) 44.3 (3.5) 40.8 52.5 (1.7) 50.8
of financial information it requires via DirectAsia, together with US
Net asset value per share (¢) 819.1 (20.5) 798.6 853.1 (19.4) 833.7
Tangible net asset value per share (¢) 746.8 (20.6) 726.2 785.8 (19.3) 766.5
Strong treasury management has to assess performance and allocate commercial, property and specialty
Return on equity (%) 5.6 (0.3) 5.3 13.5 (0.2) 13.3 ensured that the Group’s balance resources. To further align to how business written by Syndicate 3624
sheet remains well capitalised and its the Group manages its investments and Hiscox Insurance Company Inc.
The impact on the condensed consolidated interim cash flow statement is limited to a decrease in profit before tax and a operations are financed to accommodate through a centralised investment via the Hiscox USA business division.
corresponding increase in changes in other assets and liabilities within net cash flows from operating activities of $1.8 million foreseen liquidity demands together with function, and the basis for internal It also includes the European kidnap
for the year ended 31 December 2018 and $0.9 million for the six months ended 30 June 2018. a high level of capital sufficient to meet performance incentivisation, the and ransom business written by Hiscox
future catastrophe obligations even if Group has changed the method of Société Anonyme and Syndicate 33.
difficult investment market conditions allocation of the investment result to
3 Financial, insurance and other as underwriting risk, reserving risk, and the resultant exposure taken with
were to prevail for a period of time. the reportable operating segments. Hiscox London Market comprises
risk management reliability of fair values, equity price risk, caution, and has consequently suffered
Previously this was presented based the internationally traded insurance
The Group’s financial, insurance and interest rate risk, liquidity risk, credit risk, insignificant defaults on investments
4 Seasonality and weather on investment returns recognised business written by the Group’s
other risk management objectives currency risk, capital risk and tax risk. held, and other third-party balances Historically, the Group’s most material by legal entities that made up the London-based underwriters via
and policies are consistent with The Group recognises that following during the period under review. exposure to catastrophe losses on segments, and this is now allocated Syndicate 33, including lines in
that disclosed in note 3 of the full the decision of the UK to leave the certain lines of business such as to each segment based on: property, marine and energy, casualty
consolidated financial statements European Union, it may continue to face As detailed in note 16, the Group’s reinsurance inwards and marine and eattributed capital at the and other specialty insurance lines,
as at, and for the year ended, greater volatility in credit, currency and investment allocation is broadly major property risk have been greater beginning of the year under excluding the kidnap and ransom
31 December 2018, except for the liquidity risk while uncertainty remains. comparable to that at 31 December during the second half of the calendar the Group’s capital allocation business. In addition, the segment
currency risk discussed below. The 2018 as outlined in the Group year, broadly in line with the most methodology; and includes elements of business written
principal risks and uncertainties are The Group continues to monitor all Report and Accounts. The Group active period of the North Atlantic eweighted average insurance by Syndicate 3624 being auto physical
unchanged and may be summarised aspects of its financial risk appetite also continues to be mindful of the hurricane season. In contrast, a liabilities net of reinsurance. damage and aviation business.

16 Notes to the condensed consolidated interim financial statements Hiscox Ltd Interim Statement 2019 Notes to the condensed consolidated interim financial statements Hiscox Ltd Interim Statement 2019 17
Notes to the condensed consolidated interim
financial statements continued
6 Operating segments continued
Hiscox Re & ILS is the reinsurance division of the Hiscox Group, combining the underwriting platforms in Bermuda and London.
The segment comprises the performance of Hiscox Insurance Company (Bermuda) Limited, excluding the internal quota share
arrangements, with the reinsurance contracts written by Syndicate 33. In addition, the healthcare and casualty reinsurance
contracts written in the Bermuda hub on Syndicate capacity are also included. The segment also includes the performance
and fee income from the ILS funds, along with the gains and losses made as a result of the Group’s investment in the funds.
Six months ended 30 June 2019 Six months ended 30 June 2018 (restated)* Year ended 31 December 2018 (restated)*
Corporate Centre comprises finance costs and administrative costs associated with Group management activities. Corporate
Centre also includes the majority of foreign currency items on economic hedges and intragroup borrowings. These relate to
certain foreign currency items on economic hedges and intragroup borrowings. The segment includes results from run-off
portfolios where the Group has ceded all insurance risks to a third-party reinsurer.
All amounts reported below represent transactions with external parties only. In the normal course of trade, the Group’s
entities enter into various reinsurance arrangements with one another. The related results of these transactions are eliminated
on consolidation and are not included within the results of the segments. This is consistent with the information used by the
chief operating decision-maker when evaluating the results of the Group. Performance is measured based on each reportable
segment’s profit before tax.

Hiscox Hiscox Hiscox

Hiscox London Hiscox Corporate Hiscox London Hiscox Corporate Hiscox London Hiscox Corporate
Retail Market Re & ILS Centre Total Retail Market Re & ILS Centre Total Retail Market Re & ILS Centre Total
$m $m $m $m $m $m $m $m $m $m $m $m $m $m $m

Gross premiums written 1,154.6 484.6 698.3 – 2,337.5 1,113.0 458.7 655.6 1.5 2,228.8 2,087.1 877.7 812.0 1.5 3,778.3
Net premiums written 1,020.9 246.9 199.6 – 1,467.4 982.2 277.0 197.5 (57.4) 1,399.3 1,874.5 522.9 241.5 (57.4) 2,581.5
Net premiums earned 937.7 262.6 113.5 – 1,313.8 900.5 284.2 150.6 (57.4) 1,277.9 1,821.8 551.8 257.4 (57.4) 2,573.6

Investment result** 81.4 41.5 24.6 – 147.5 10.2 5.7 3.9 – 19.8 19.9 10.8 7.4 – 38.1
Other income 14.5 2.9 8.3 0.1 25.8 12.2 0.7 11.0 0.1 24.0 23.8 9.8 13.1 0.1 46.8

Total income 1,033.6 307.0 146.4 0.1 1,487.1 922.9 290.6 165.5 (57.3) 1,321.7 1,865.5 572.4 277.9 (57.3) 2,658.5

Claims and claim adjustment expenses, net of reinsurance (431.0) (163.6) (89.2) – (683.8) (375.6) (129.8) (67.7) 57.5 (515.6) (812.1) (253.3) (217.9) 57.5 (1,225.8)
Expenses for the acquisition of insurance contracts (251.3) (77.8) (8.6) – (337.7) (220.5) (76.2) (12.1) (0.4) (309.2) (459.3) (164.6) (17.4) (0.4) (641.7)
Operational expenses (215.2) (32.7) (37.5) (9.6) (295.0) (224.6) (40.9) (29.7) (14.9) (310.1) (448.5) (75.5) (58.4) (25.1) (607.5)
Net foreign exchange (losses)/gains 2.3 1.9 3.7 7.7 15.6 (2.0) (1.0) 2.5 (8.0) (8.5) 1.1 (2.6) (11.6) (0.6) (13.7)

Total expenses (895.2) (272.2) (131.6) (1.9) (1,300.9) (822.7) (247.9) (107.0) 34.2 (1,143.4) (1,718.8) (496.0) (305.3) 31.4 (2,488.7)

Results of operating activities 138.4 34.8 14.8 (1.8) 186.2 100.2 42.7 58.5 (23.1) 178.3 146.7 76.4 (27.4) (25.9) 169.8
Finance costs (0.7) (0.4) (0.8) (16.3) (18.2) – – (0.7) (14.7) (15.4) (0.2) (0.6) (1.3) (32.5) (34.6)
Share of (loss)/profit of associates after tax – – – – – (0.2) – – – (0.2) (0.2) – – 0.6 0.4

Profit/(loss) before tax 137.7 34.4 14.0 (18.1) 168.0 100.0 42.7 57.8 (37.8) 162.7 146.3 75.8 (28.7) (57.8) 135.6

Profit/(loss) before tax and foreign exchange gains/(losses) 135.4 32.5 10.3 (25.8) 152.4 102.0 43.7 55.3 (29.8) 171.2 145.2 78.4 (17.1) (57.2) 149.3

100% ratio analysis***

Claims ratio (%) 45.3 62.8 79.3 – 53.3 41.1 46.8 44.8 – 42.9 43.8 46.0 83.8 – 48.5
Expense ratio (%)
50.0 41.2 34.5 – 46.1 49.3 41.6 27.5 – 44.9 49.8 43.0 28.7 – 45.9

Combined ratio excluding foreign exchange impact (%) 95.3 104.0 113.8 – 99.4 90.4 88.4 72.3 – 87.8 93.6 89.0 112.5 – 94.4
Foreign exchange impact (%) (0.3) (0.7) (2.5) – (0.6) 0.3 0.2 (0.8) – 0.1 – 0.3 4.4 – 0.5

Combined ratio (%)† 95.0 103.3 111.3 – 98.8 90.7 88.6 71.5 – 87.9 93.6 89.3 116.9 – 94.9

*See note 2.2 for further details.

**Re-presented to reflect change in method of allocation of the investment result to reportable operating segments. The impact as at 30 June 2018
amounted to increases of $6.2 million in Hiscox Retail, $0.8 million in Hiscox London Market and $0.8 million in Hiscox Re & ILS and a decrease in
Corporate Centre of $7.8 million. The impact as at 31 December 2018 amounted to an increase of $10.4 million in Hiscox Retail, and decreases of
$2.5 million in Hiscox London Market, $5.5 million in Hiscox Re & ILS and $2.4 million in Corporate Centre. See page 17 for further details.
***The Group’s percentage participation in Syndicate 33 can fluctuate from year to year, and consequently, presentation of the ratios at the 100%
level removes any distortions arising therefrom.
†
The combined ratio is made up of the aggregation of the claims ratio, the expense ratio and the impact of foreign exchange. The claims ratio is calculated
as claims and claim adjustment expenses, net of reinsurance, as a proportion of net premiums earned. The expense ratio is calculated as the total of
expenses for the acquisition of insurance contracts, and operational expenses as a proportion of net premiums earned. The foreign exchange impact
ratio is calculated as the foreign exchange gains or losses as a proportion of net premiums earned. All ratios are calculated using the 100% results and
excludes a run-off portfolio where the Group has ceded all insurance risks to a third-party (re)insurer included within Corporate Centre.

The tables presented below contain the net earned premium, claims, expenses and foreign exchange items at 100% ownership,
to enable calculation of the ratios included in the operating segments.
Six months ended 30 June 2019 Six months ended 30 June 2018 Year ended 31 December 2018

Hiscox Hiscox Hiscox

Hiscox London Hiscox Corporate Hiscox London Hiscox Corporate Hiscox London Hiscox Corporate
Retail Market Re & ILS Centre Total Retail Market Re & ILS Centre Total Retail Market Re & ILS Centre Total
$m $m $m $m $m $m $m $m $m $m $m $m $m $m $m

Net premiums earned 956.4 354.6 163.5 – 1,474.5 921.1 350.5 170.1 – 1,441.7 1,863.0 719.4 298.1 – 2,880.5
Claims and claim adjustment expenses, net of reinsurance (433.4) (222.6) (129.7) – (785.7) (378.4) (164.1) (76.2) – (618.7) (816.1) (330.9) (249.8) – (1,396.8)
Expenses for the acquisition of insurance contracts (259.0) (105.5) (14.6) – (379.1) (228.4) (95.5) (13.2) – (337.1) (475.6) (213.9) (19.5) – (709.0)
Operational expenses (218.6) (40.4) (41.9) – (300.9) (225.9) (50.1) (33.5) – (309.5) (451.9) (95.2) (66.0) – (613.1)
Net foreign exchange (losses)/gains 2.5 2.1 4.2 – 8.8 (2.5) (0.8) 1.3 – (2.0) 0.3 (2.7) (13.2) – (15.6)

18 Notes to the condensed consolidated interim financial statements Hiscox Ltd Interim Statement 2019 Notes to the condensed consolidated interim financial statements Hiscox Ltd Interim Statement 2019 19
Notes to the condensed consolidated interim 9 Investment result continued
ii) Annualised investment return
financial statements continued

Return Yield Return Yield Return Yield

Six months to 30 June 2019 Six months to 30 June 2018 Year to 31 Dec 2018

$m % $m % $m %

Debt and fixed income securities 100.9 4.4 11.6 0.5 57.5 1.3
7 Net asset value (NAV) per share Equities and shares in unit trusts 46.5 22.5 4.6 2.1 (27.5) (6.2)
30 June 2019 30 June 2018 (restated)* 31 Dec 2018 (restated)* Deposits with credit institutions/cash and cash equivalents 3.5 0.6 5.7 0.8 12.5 0.8

Net asset Net asset Net asset Investment return – financial assets 150.9 4.8 21.9 0.7 42.5 0.7
value NAV value NAV value NAV
(total equity) per share (total equity) per share (total equity) per share
$m cent $m cent $m cent
10 Other income and operational expenses

Net asset value 2,321.8 817.0 2,364.8 833.7 2,259.0 798.6 Six months to Year to
Net tangible asset value 2,090.5 735.6 2,174.0 766.5 2,054.4 726.2 Six months to 30 June 2018 31 Dec 2018
30 June 2019 (restated)* (restated)*
$m $m $m
*See note 2.2 for further details.
Agency-related income 14.6 13.3 27.1
The NAV per share is based on 284,193,001 shares (30 June 2018: 283,638,511; 31 December 2018: 282,886,319), being Profit commission 0.7 0.4 7.0
the shares in issue at 30 June, less those held in treasury and those held by the Group Employee Benefit Trust. Net Other underwriting income/(loss) 1.9 2.6 (3.4)
tangible assets comprise total equity excluding intangible assets. The NAV per share expressed in pence is 641.9 pence Other income 8.6 7.7 16.1
(30 June 2018: 633.6 pence; 31 December 2018: 626.9 pence).
Other income 25.8 24.0 46.8

8 Return on equity (ROE) Wages and salaries 97.8 107.6 212.3

Six months to Year to Social security costs 17.1 18.0 32.7
Six months to 30 June 2018 31 Dec 2018 Pension cost – defined contribution 7.8 7.3 14.6
30 June 2019 (restated)* (restated)*
$m $m $m Pension cost – defined benefit – – 2.2
Share-based payments 7.2 13.9 (3.6)
Profit for the period 145.1 148.0 117.9 Marketing expenses 41.3 32.1 69.7
Opening total equity 2,259.0 2,317.2 2,317.2 Depreciation, amortisation and impairment 22.7 16.9 33.2
Adjusted for the time weighted impact of capital distributions and issuance of shares (6.6) (20.8) (83.7) Other expenses 101.1 114.3 246.4
Adjusted opening total equity 2,252.4 2,296.4 2,233.5
Operational expenses 295.0 310.1 607.5
Annualised return on equity (%) 13.3 13.3 5.3
*See note 2.2 for further details.
*See note 2.2 for further details.
Wages and salaries have been shown net of transfers to acquisition and claims expenses.
The ROE is calculated by using profit for the period divided by the adjusted opening total equity. The adjusted opening total
equity represents the equity on 1 January of the relevant year as adjusted for time-weighted aspects of capital distributions Other expenses include, but are not limited to, legal and professional costs, computer costs, contractor-based costs and
and issuing of shares or treasury share purchases during the period. The time-weighted positions are calculated on a daily property costs. None of the items are individually material.
basis with reference to the proportion of time from the transaction to the end of the period. The Company annualises the
ROE by using a standard compound formula for the half year periods, being the profit for the period divided by the adjusted 11 Finance costs
opening total equity, to the power of two to annualise for a full-year comparison. Six months to Six months to Year to
30 June 2019 30 June 2018 31 Dec 2018
$m $m $m
9 Investment result
i) Analysis of investment result Interest charge associated with long-term debt 14.4 13.7 28.3
Interest and expenses associated with bank borrowing facilities 1.4 0.6 2.5
The total investment result for the Group before taxation comprises:
Six months to Six months to Year to Interest and charges associated with Letters of Credit 1.2 0.9 3.2
30 June 2019 30 June 2018 31 Dec 2018 Other interest expenses* 1.2 0.2 0.6
$m $m $m
18.2 15.4 34.6
Investment income including interest receivable 60.4 49.5 103.0
Net realised gains/(losses) on financial investments at fair value through profit or loss 16.6 (13.6) (25.4) *30 June 2019 figure includes interest expense on lease liabilities of $0.9 million, see note 2.1 for further details.
Net fair value gains/(losses) on financial investments at fair value through profit or loss 73.9 (14.0) (35.1)
As at 30 June 2019, the total amount drawn by way of Letter of Credit to support the Funds at Lloyd’s requirement was
Investment result – financial assets 150.9 21.9 42.5
$50.0 million (30 June 2018: $244.0 million, 31 December 2018: $50.0 million).
Fair value (losses)/gains on derivative financial instruments (0.5) 0.7 1.3
Investment expenses (2.9) (2.8) (5.7)

Total result 147.5 19.8 38.1

20 Notes to the condensed consolidated interim financial statements Hiscox Ltd Interim Statement 2019 Notes to the condensed consolidated interim financial statements Hiscox Ltd Interim Statement 2019 21
Notes to the condensed consolidated interim 13 Insurance liabilities and reinsurance assets continued
Insurance claims and claims expenses reserves – net of reinsurance at 100%
financial statements continued Accident year ending
31 December**
2010 2011 2012 2013 2014 2015 2016
$m $m $m $m $m $m $m $m $m $m
2017 2018 2019 Total
$m

Estimate of ultimate claims

costs as adjusted for
12 Tax expense foreign exchange*:
The Company and its subsidiaries are subject to enacted tax laws in the jurisdictions in which they are incorporated at end of accident year** 1,205.5 1,479.5 1,165.4 1,113.5 1,162.1 1,237.0 1,448.8 1,833.0 1,760.8 777.9 13,183.5
and domiciled. one period later** 1,054.7 1,363.2 1,025.9 987.9 1,021.0 1,144.1 1,331.2 1,611.6 1,828.5 – 11,368.1
two periods later** 991.5 1,309.2 951.0 887.4 927.3 1,050.6 1,255.6 1,598.6 – – 8,971.2
The amount charged in the condensed consolidated income statement comprise the following: three periods later** 965.4 1,306.5 915.4 823.2 873.3 1,043.6 1,247.1 – – – 7,174.5
four periods later** 935.5 1,297.6 906.3 818.7 841.5 1,051.8 – – – – 5,851.4
Six months to Year to five periods later** 929.9 1,245.5 926.4 793.6 830.0 – – – – – 4,725.4
Six months to 30 June 2018 31 Dec 2018 six periods later** 897.9 1,209.6 916.5 787.5 – – – – – – 3,811.5
30 June 2019 (restated)* (restated)*
$m $m $m seven periods later** 883.2 1,177.7 911.5 – – – – – – – 2,972.4
eight periods later** 877.2 1,159.7 – – – – – – – – 2,036.9
Current tax expense 18.3 21.4 29.5 nine periods later** 872.3 – – – – – – – – – 872.3

Deferred tax credit 4.6 (6.7) (11.8) Current estimate of
cumulative claims 872.3 1,159.7 911.5 787.5 830.0 1,051.8 1,247.1 1,598.6 1,828.5 777.9 11,064.9
Total tax charged to the income statement 22.9 14.7 17.7 Cumulative payments
to date (833.6) (1,128.3) (796.2) (727.2) (692.6) (774.5) (910.9) (995.2) (720.3) (141.2) (7,720.0)
*See note 2.2 for further details.
Liability recognised at
13 Insurance liabilities and reinsurance assets 100% level 38.7 31.4 115.3 60.3 137.4 277.3 336.2 603.4 1,108.2 636.7 3,344.9
Six months to Six months to Year to Liability recognised in
30 June 2019 30 June 2018 31 Dec 2018 respect of prior accident
$m $m $m
years at 100% level 92.3
Gross Total net liability to
Claims and claim adjustment expenses outstanding 5,211.3 4,404.0 4,992.2 external parties at
Unearned premiums 2,155.5 2,070.1 1,709.3 100% level 3,437.2

Total insurance liabilities, gross

7,366.8 6,474.1 6,701.5 *The foreign exchange adjustment arises from the retranslation of the estimates at each date using the exchange rate ruling at 30 June 2019.
**With the exception of the most recent development data for each accident year, which only relates to the six months ending 30 June 2019,
Recoverable from reinsurers the term period refers to one full calendar year. This includes the run-off casualty loss portfolio transfer.
Claims and claim adjustment expenses outstanding 2,144.6 1,506.8 2,047.1
Unearned premiums 700.9 642.1 409.5 Reconciliation of 100% disclosures above to Group’s share – net of reinsurance
Total reinsurers’ share of insurance liabilities
2,845.5 2,148.9 2,456.6 Accident year 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Total
$m $m $m $m $m $m $m $m $m $m $m
Net
Claims and claim adjustment expenses outstanding 3,066.7 2,897.2 2,945.1 Current estimate of
Unearned premiums 1,454.6 1,428.0 1,299.8 cumulative claims 872.3 1,159.7 911.5 787.5 830.0 1,051.8 1,247.1 1,598.6 1,828.5 777.9 11,064.9
Less: attributable to
Total insurance liabilities, net 4,521.3 4,325.2 4,244.9 external Names (126.7) (160.2) (97.5) (82.2) (85.1) (108.2) (125.0) (165.5) (181.1) (84.4) (1,215.9)

Group share of current

Net claims and claim adjustment expenses include releases of $26.0 million (30 June 2018: $154.3 million; 31 December 2018:
$326.5 million) related to reserves established in prior reporting periods. The development of net claims reserves by accident
years are detailed on the next page.
ultimate claims estimate 745.6 999.5 814.0 705.3 744.9 943.6 1,122.1 1,433.1 1,647.4 693.5 9,849.0
Cumulative payments
to date (833.6) (1,128.3) (796.2) (727.2) (692.6) (774.5) (910.9) (995.2) (720.3) (141.2) (7,720.0)
Less: attributable to
external Names 117.6 151.4 83.0 72.9 74.4 77.9 91.8 104.7 76.4 16.0 866.1

Group share of
cumulative payments (716.0) (976.9) (713.2) (654.3) (618.2) (696.6) (819.1) (890.5) (643.9) (125.2) (6,853.9)

Liability for 2010 to

2018 accident years
recognised on Group’s
balance sheet 29.6 22.6 100.8 51.0 126.7 247.0 303.0 542.6 1,003.5 568.3 2,995.1
Liability for accident years
before 2010 recognised
on Group’s balance sheet 71.6

Total Group liability to

external parties included
in the balance sheet, net† 3,066.7
†
This represents the claims element of the Group’s insurance liabilities and reinsurance assets.

22 Notes to the condensed consolidated interim financial statements Hiscox Ltd Interim Statement 2019 Notes to the condensed consolidated interim financial statements Hiscox Ltd Interim Statement 2019 23
 15 Dividends paid to owners of the Company continued
Notes to the condensed consolidated interim From the 2018 interim dividend, dividends have been and will continue to be declared in US Dollars, aligning shareholder
returns with the primary currency in which the Group generates cash flow.
financial statements continued
The Board has declared an interim dividend of 13.75¢ per share to be paid on 11 September 2019 to shareholders registered
on 9 August 2019 in respect of the six months to 30 June 2019 (30 June 2018: 13.25¢ per ordinary share). The dividends will
be paid in Sterling unless shareholders elect to be paid in US Dollars. The foreign exchange rate at which future dividends
14 Earnings per share
declared in US Dollars will be converted into Sterling will be calculated based on the average exchange rate in the five
Basic
business days prior to the scrip dividend price being determined. On this occasion, the period will be between 19 August
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted
2019 to 23 August 2019 inclusive.
average number of ordinary shares in issue during the period, excluding ordinary shares purchased by the Group and held in
treasury as own shares.
A scrip dividend alternative will be offered to the shareholders of the Company.
Six months to Year to
30 June 2018 31 Dec 2018
Six months to
30 June 2019 (restated)* (restated)* When determining the level of dividend each year, the Board considers the ability of the Group to generate cash; the availability
of that cash in the Group, while considering constraints such as regulatory capital requirements and the level required to invest
Profit for the period attributable to owners of the Company ($m) 145.1 148.0 117.9
in the business. This is a progressive policy and is expected to be maintained for the foreseeable future.
Weighted average number of ordinary shares in issue (thousands) 283,346 283,411 283,564
Basic earnings per share (cent per share) 51.2¢ 52.2¢ 41.6¢ 16 Financial assets and liabilities
i) Analysis of financial assets carried at fair value

Basic earnings per share (pence per share) 39.6p 38.0p 31.2p 30 June 2019 30 June 2018 31 Dec 2018
$m $m $m
*See note 2.2 for further details.
Debt and fixed income securities 4,778.2 4,425.7 4,574.6
Diluted Equities and shares in unit trusts 478.4 434.6 398.0
Diluted earnings per share is calculated by adjusting the assumed conversion of all dilutive potential ordinary shares. Deposits with credit institutions – 5.6 0.4
The Company has one category of dilutive potential ordinary shares, share options and awards. For the share options,
Total investments
5,256.6 4,865.9 4,973.0
a calculation is made to determine the number of shares that could have been acquired at fair value (determined as the
average annual market share price of the Company’s shares) based on the monetary value of the subscription rights Insurance-linked funds 59.6 61.3 55.2
attached to outstanding share options. The number of shares calculated as above is compared with the number of Derivative financial instruments 0.4 0.3 1.5
shares that would have been issued assuming the exercise of the share options. Total financial assets carried at fair value
5,316.6 4,927.5 5,029.7
Six months to Year to
30 June 2018
Six months to 31 Dec 2017
30 June 2019 (restated)* (restated)*
ii) Analysis of financial liabilities carried at fair value
30 June 2019 30 June 2018 31 Dec 2018
Profit for the period attributable to owners of the Company ($m) 145.1 148.0 117.9 $m $m $m

Weighted average number of ordinary shares in issue (thousands) 283,346 283,411 283,564 Derivative financial instruments 0.2 0.1 1.1
Adjustment for share options (thousands) 5,717 8,155 5,650
Total financial liabilities carried at fair value 0.2 0.1 1.1
Weighted average number of ordinary shares for diluted earnings per share (thousands) 289,063 291,566 289,214

Diluted earnings per share (cent per share) 50.2¢ 50.8¢ 40.8¢
iii) Analysis of financial liabilities carried at amortised cost
30 June 2019 30 June 2018 31 Dec 2018
Diluted earnings per share (pence per share) 38.8p 36.9p 30.6p $m $m $m

*See note 2.2 for further details. Long-term debt 697.0 719.8 697.1
Accrued interest on long-term debt 16.6 15.5 2.3
Diluted earnings per share has been calculated after taking account of outstanding options and awards under employee share
option and performance plan schemes and also options under save as you earn schemes. Total financial liabilities carried at amortised cost 713.6 735.3 699.4

15 Dividends paid to owners of the Company

Six months to Six months to Year to iv) Investment and cash allocation
30 June 2019 30 June 2018 31 Dec 2018
30 June 2019 30 June 2018 31 Dec 2018
$m $m $m $m % $m % $m %

Final dividend for the year ended:
31 December 2018 of 28.6¢ (net) per share 86.4 – –
31 December 2017 of 19.5p or 27.2¢ (net) per share – 76.0 76.0
Interim dividend for the year ended:
31 December 2018 of 13.25¢ (net) per share – – 37.5
Debt and fixed income securities 4,778.2 75.1 4,425.7 68.5 4,574.6 73.0
Equities and shares in unit trusts 478.4 7.5 434.6 6.7 398.0 6.4
Deposits with credit institutions/cash and cash equivalents 1,110.5 17.4 1,600.1 24.8 1,289.2 20.6
Total 6,367.1 6,460.4 6,261.8

86.4 76.0 113.5

The final dividend for the year ended 31 December 2018 of 28.6¢ was paid in cash of $80,203,000 and 296,044 shares for
the scrip dividend. The final dividend for the year ended 31 December 2017 of 19.5p (equivalent to 27.2¢) was paid in cash of
$71,524,000 and 263,368 shares for the scrip dividend. The interim dividend for the year ended 31 December 2018 of 13.25¢
was paid in cash of $35,694,000 and 107,896 shares for the scrip dividend.

24 Notes to the condensed consolidated interim financial statements Hiscox Ltd Interim Statement 2019 Notes to the condensed consolidated interim financial statements Hiscox Ltd Interim Statement 2019 25
Notes to the condensed consolidated interim 17 Fair value measurements continued

financial statements continued Level 1

As at 30 June 2018 $m $m $m $m
Level 2 Level 3 Total

Financial assets
Debt and fixed income securities 1,536.4 2,889.3 – 4,425.7
16 Financial assets and liabilities continued Equities and shares in unit trusts – 420.0 14.6 434.6
On 24 November 2015, the Group issued £275.0 million 6.125% fixed-to-floating rate callable subordinated notes due 2045, with a Deposits with credit institutions 5.6 – – 5.6
Insurance-linked funds – – 61.3 61.3
first call date of 2025.
Derivative financial instruments – 0.3 – 0.3
The notes bear interest from and including 24 November 2015 at a fixed rate of 6.125% per annum annually in arrears starting Total
1,542.0
3,309.6 75.9
4,927.5
24 November 2016 up until the first call date in November 2025, and thereafter at a floating rate of interest equal to three-month
LIBOR plus 5.076% payable quarterly in arrears on each floating interest payment date. Financial liabilities
Derivative financial instruments – 0.1 – 0.1
On 25 November 2015, the notes were admitted for trading on the London Stock Exchange’s regulated market. The notes were
rated BBB- by both S&P and Fitch. Total – 0.1 – 0.1

On 14 March 2018, the Group issued £275.0 million 2% notes due December 2022. Level 1 Level 2 Level 3 Total
As at 31 December 2018 $m $m $m $m
The notes bear interest from and including 14 March 2018 at a fixed rate of 2% per annum annually in arrears starting
14 December 2018 until maturity on 14 December 2022. On 14 March 2018, the notes were admitted for trading on the Financial assets
Luxembourg Stock Exchange’s Euro MTF. The notes were rated BBB+ by both S&P and Fitch. Debt and fixed income securities 1,509.0 3,065.6 – 4,574.6
Equities and shares in unit trusts – 379.1 18.9 398.0
The interest accrued on the long-term debt was $16.6 million at the balance sheet date (30 June 2018: $15.5 million; Deposits with credit institutions 0.4 – – 0.4
31 December 2018: $2.3 million) and is included in financial liabilities. Insurance-linked funds – – 55.2 55.2
Derivative financial instruments – 1.5 – 1.5
v) Total investments and cash allocation by currency Total
1,509.4
3,446.2 74.1
5,029.7
30 June 2019 30 June 2018
31 Dec 2018
% % % Financial liabilities
Derivative financial instruments – 1.1 – 1.1
US Dollars 65.7 61.2 64.4
Sterling 23.4 25.0 22.7 Total – 1.1 – 1.1
Euro and other currencies 10.9 13.8 12.9

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the
17 Fair value measurements ‘fair value hierarchy’ described as follows, based on the lowest level input that is significant to the fair value measurement
An analysis of assets and liabilities carried at fair value categorised by fair value hierarchy that reflects the significance of the as a whole:
inputs used in measuring the fair value, is set out below. level 1 – fair values measured using quoted prices (unadjusted) in active markets for identical instruments;
level 2 – fair values measured using directly or indirectly observable inputs or other similar valuation techniques
Level 1 Level 2 Level 3 Total for which all significant inputs are based on market observable data;
As at 30 June 2019 $m $m $m $m level 3 – fair values measured using valuation techniques for which significant inputs are not based on market
Financial assets observable data.
Debt and fixed income securities 1,384.1 3,394.1 – 4,778.2
Equities and shares in unit trusts – 459.7 18.7 478.4 The fair values of the Group’s financial assets are based on prices provided by investment managers who obtain market data
Deposits with credit institutions – – – – from numerous independent pricing services. The pricing services used by the investment managers obtain actual transaction
Insurance-linked funds – – 59.6 59.6 prices for securities that have quoted prices in active markets. For those securities which are not actively traded, the pricing
Derivative financial instruments – 0.4 – 0.4
services use common market valuation pricing models. Observable inputs used in common market valuation pricing models
Total
1,384.1 3,854.2 78.3 5,316.6 include, but are not limited to, broker quotes, credit ratings, interest rates and yield curves, prepayment speeds, default rates
and other such inputs which are available from market sources.
Financial liabilities
Derivative financial instruments – 0.2 – 0.2
Investments in mutual funds, which are included in equities and shares in unit trusts, comprise a portfolio of stock investments
Total – 0.2 – 0.2 in trading entities which are invested in various quoted investments. The fair value of shares in unit trusts are based on the net
asset value of the fund reported by independent pricing sources or the fund manager.

Included within Level 1 of the fair value hierarchy are certain government bonds, treasury bills, long-term debt and
exchange-traded equities which are measured based on quoted prices in active markets.

Level 2 of the hierarchy contains certain government bonds, US government agencies, corporate securities, asset-backed
securities and mortgage-backed securities. The fair value of these assets are based on the prices obtained from both investment
managers and investment custodians as discussed above. The Group records the unadjusted price provided and validates the
price through a number of methods including a comparison of the prices provided by the investment managers with the
investment custodians and the valuation used by external parties to derive fair value. Quoted prices for US government agencies
and corporate securities are based on a limited number of transactions for those securities and as such the Group considers
these instruments to have similar characteristics as those instruments classified as Level 2. Also included within Level 2 are
units held in traditional long funds and long and short special funds and over-the-counter derivatives.
26 Notes to the condensed consolidated interim financial statements Hiscox Ltd Interim Statement 2019 Notes to the condensed consolidated interim financial statements Hiscox Ltd Interim Statement 2019 27
Notes to the condensed consolidated interim Title
17 Fair value measurements continued

financial statements continued

Financial assets

17 Fair value measurements continued
Level 3 contains investments in a limited partnership and unquoted equity securities and an insurance-linked fund which
have limited observable inputs on which to measure fair value. Unquoted equities, including equity instruments in limited
partnerships, are carried at fair value. Fair value is determined to be net asset value for the limited partnerships, and for the
equity holdings it is determined to be the latest available traded price. The effect of changing one or more of the inputs used
in the measurement of fair value of these instruments to another reasonably possible assumption would not be significant.
At 30 June 2019, the insurance-linked fund of $59.6 million (30 June 2018: $61.3 million; 31 December 2018: $55.2 million)
represents the Group’s investment in Kiskadee Funds.
Equities and
shares in Insurance-
unit trusts linked funds Total
31 December 2018 $m $m $m
Balance at 1 January 15.4 49.9 65.3
Fair value gains or losses through profit or loss (0.4) (3.1) (3.5)
Net foreign exchange gains/(losses) (0.7) – (0.7)
Purchases 5.0 9.3 14.3
Settlements (0.4) (0.9) (1.3)
Closing balance 18.9 55.2 74.1
Unrealised gains and losses in the period on securities held at the end of the period (0.4) (3.1) (3.5)

The fair value of the Kiskadee Funds is estimated to be the net asset value as at the balance sheet date. The net asset value is
based on the fair value of the assets and liabilities in the Kiskadee Funds. Significant inputs and assumptions in calculating the fair
value of the assets and liabilities associated with reinsurance contracts written by the Kiskadee Funds include the amount and timing
of claims payable in respect of claims incurred and periods of unexpired risk. The Group has considered changes in the net asset
valuation of the Kiskadee Funds if reasonably different inputs and assumptions were used and has found no significant changes in
the valuation.
In certain cases, the inputs used to measure the fair value of a financial instrument may fall into more than one level within the fair
value hierarchy. In this instance, the fair value of the instrument in its entirety is classified based on the lowest level of input that is
significant to the fair value measurement.
18 Condensed consolidated interim cash flow statement
The purchase, maturity and disposal of financial assets and liabilities, including derivatives, is part of the Group’s insurance
activities and is therefore classified as an operating cash flow.
Included within cash and cash equivalents held by the Group are balances totalling $154 million (30 June 2018: $268 million;
31 December 2018: $211 million) not available for use by the Group outside of the Lloyd’s Syndicates within which they are
held. Additionally, $42 million (30 June 2018: $20 million; 31 December 2018: $24 million) is pledged cash against Funds at
Lloyd’s, and $nil (30 June 2018: $11 million; 31 December 2018: $10 million) is held within trust funds against reinsurance
arrangements.

During the period, there were no significant transfers made between Level 1, Level 2 or Level 3 of the fair value hierarchy.

The following table sets forth a reconciliation of opening and closing balances for financial instruments classified under Level 3
of the fair value hierarchy:
Financial assets

Equities and
shares in Insurance-
unit trusts linked funds Total
30 June 2019 $m $m $m
Balance at 1 January 18.9 55.2 74.1
Fair value gains or losses through profit or loss (0.2) 2.1 1.9
Net foreign exchange losses − (0.1) (0.1)
Purchases − 2.6 2.6
Settlements – (0.2) (0.2)

Closing balance 18.7 59.6 78.3

Unrealised gains and losses in the period on securities held at the end of the period (0.2) 2.1 1.9

Financial assets

Equities and
shares in Insurance-
unit trusts linked funds Total
30 June 2018 $m $m $m

Balance at 1 January 15.4 49.9 65.3

Fair value gains or losses through profit or loss (0.4) 2.5 2.1
Net foreign exchange losses
(0.3) (0.2) (0.5)
Purchases – 9.3 9.3
Settlements (0.1) (0.2) (0.3)

Closing balance 14.6 61.3 75.9

Unrealised gains and losses in the period on securities held at the end of the period (0.5) 2.5 2.0

28 Notes to the condensed consolidated interim financial statements Hiscox Ltd Interim Statement 2019 Notes to the condensed consolidated interim financial statements Hiscox Ltd Interim Statement 2019 29
Directors’ Independent
responsibilities review report to
statement Hiscox Ltd
Report on the condensed consolidated
The Directors confirm, to the best of
interim financial statements
our knowledge, that the condensed
consolidated interim financial
Our conclusion
statements have been prepared in
We have reviewed Hiscox Ltd’s
accordance with IAS 34 Interim
condensed consolidated interim
Financial Reporting as endorsed by
financial statements, defined below,
the European Union and the Interim
in the Interim Statement 2019 of
Statement includes a fair review of
Hiscox Ltd for the six-month period
the information required by sections
ended 30 June 2019. Based on our
4.2.7R and 4.2.8R of the Disclosure
review, nothing has come to our
and Transparency Rules of the United
attention that causes us to believe
Kingdom’s Financial Conduct that the condensed consolidated
Authority, being:
interim financial statements are not
an indication of important events
prepared, in all material respects,
during the first six months of the
in accordance with International
current financial year and their
Accounting Standard 34, ‘Interim
impact on the condensed
Financial Reporting’, as adopted
consolidated interim financial by the European Union and
statements, and a description of
the Disclosure Guidance and
the principal risks and uncertainties Transparency Rules sourcebook
for the remaining six months of
of the United Kingdom’s Financial
the year; and
Conduct Authority.
related-party transactions that
have taken place in the first
What we have reviewed
six months of the current year
The condensed consolidated interim
and that have materially affected
financial statements comprise:
the consolidated financial position
the condensed consolidated interim
or performance of Hiscox Ltd
income statement for the six-month
during that period, and any
period ended 30 June 2019;
changes in the related-party
the condensed consolidated
transactions described in the
interim statement of comprehensive
last annual report that could
income for the six-month period
have such a material effect.
ended 30 June 2019;
the condensed consolidated
The individuals responsible for
interim balance sheet as at
authorising the responsibility statement
30 June 2019;
on behalf of the Board are the Chief
the condensed consolidated
Executive, Bronek Masojada and the
interim statement of changes in
Chairman, Robert Childs. Accordingly,
equity for the six-month period
the Interim Statement 2019 was
ended 30 June 2019;
approved for issue on Monday,
the condensed consolidated
29 July 2019.
interim cash flow statement for
the six-month period ended
30 June 2019; and
the explanatory notes to the
condensed consolidated interim
financial statements.
30 Directors’ responsibilities statement Hiscox Ltd Interim Statement 2019
The condensed consolidated interim
financial statements included in
whom this report is shown or into
whose hands it may come save where
the Interim Statement 2019 have
been prepared in accordance with
expressly agreed by our prior consent
in writing.
International Accounting Standard 34,
‘Interim Financial Reporting’, as What a review of interim financial
adopted by the European Union statements involves
and the Disclosure Guidance and We conducted our review in accordance
Transparency Rules sourcebook with International Standard on Review
of the United Kingdom’s Financial Engagements 2410, ‘Review of Interim
Conduct Authority. Financial Information Performed by
the Independent Auditor of the Entity’
As disclosed in note 2 to the issued by the International Auditing and
condensed consolidated interim Assurance Standards Board. A review
financial statements, the financial of interim financial information consists
reporting framework that has been of making enquiries, primarily of persons
applied in the preparation of the responsible for financial and accounting
full annual consolidated financial matters, and applying analytical and
statements of the Group is applicable other review procedures.
law and International Financial
Reporting Standards (IFRSs) as A review is substantially less in scope
adopted by the European Union. than an audit conducted in accordance
with International Standards on Auditing
Responsibilities for the condensed and, consequently, does not enable us
consolidated interim financial to obtain assurance that we would
become aware of all significant matters
statements and the review
that might be identified in an audit.
Accordingly, we do not express an
Our responsibilities and those
audit opinion.
of the Directors
The Interim Statement 2019, including
We have read the other information
the condensed consolidated interim
contained in the Interim Statement 2019
financial statements, is the responsibility
and considered whether it contains any
of, and has been approved by, the
apparent misstatements or material
directors. The directors are responsible
inconsistencies with the information in
for preparing the Interim Statement
the condensed consolidated interim
2019 in accordance with the Disclosure
financial statements.
Guidance and Transparency Rules
sourcebook of the United Kingdom’s
PricewaterhouseCoopers Ltd.
Financial Conduct Authority.
Chartered Professional Accountants
Hamilton, Bermuda
Our responsibility is to express a
29 July 2019
conclusion on the condensed
consolidated interim financial
statements in the Interim Statement
2019 based on our review. This report,
including the conclusion, has been
prepared for and only for the company
for the purpose of complying with the
Disclosure Guidance and Transparency
Rules sourcebook of the United
Kingdom’s Financial Conduct Authority
and for no other purpose. We do not,
in giving this conclusion, accept or
assume responsibility for any other
purpose or to any other person to
Independent review report to Hiscox Ltd Hiscox Ltd Interim Statement 2019 31
Hiscox Ltd

4th Floor
Wessex House
45 Reid Street
Hamilton HM 12
Bermuda

T +1 441 278 8300

E enquiries@hiscox.com
www.hiscoxgroup.com

20010 07/19